The effect of auditor suggested reforms on earnings quality

The main purpose of this research is to investigate the effect of auditor's proposed reforms on the earnings quality. The sample consists of 165 firms listed in the Tehran Stock Exchange during the period from 2009 to 2016. Paired t-test is used to test the research hypotheses. According to the findings, there is no significant difference of smoothness and sustainability between unaudited earnings and audited earnings. In addition, evidence shows that audited accruals have a higher quality as compared to unaudited accruals. Moreover, results show that the extent of positive accruals changing into negative ones is more than negative accruals changing into positive ones after auditing. According to the results, there is no significant difference of negative accruals amount between audited and unaudited financial statements. Also, findings show that the positive accruals amount in audited financial statements is less than it in unaudited financial statements. Finally, the results show that there is no significant difference of inconsistency in profit distribution about zero between the time before auditing and after it.